Risk assessment implications

Risk assessment implications

The chosen component of internal control to be discussed in this assignment is the risk assessment. It is a term used for describing the entire procedure of identifying hazard factors that might potentially affect an organization. The component is used by companies to analyze and evaluate the potential risk factors that might associate with the hazards to have significant impacts on the organizations (Aven, 2016). It carefully examines overall risk factors in organizations that can cause harm. It also

provide effective measures that can be taken by such organizations to curb or control those risks.

Risk assessment measures the probabilities and consequences relating to risk events whenever they are realized. Ones they are identified, the risk factors are then prioritized for the establishment of most-to-least vital significant ranking. Substantially, the classification of risks in regards to their importance helps organizations to have an insight into the management of its projects. Moreover, it enables organizations to manage their resources effectively. It helps to identify sections with scarce resources, thereby mitigating the high consequence or probability risk events within their organizational departments (Aven, 2016). Areas with limited resources can be prioritized for mitigation process to prevent any potential risk events from incurring the organizations. Based on the diagram below, the assessment and prioritization of risk impact are placed at the second and third steps in the process.

Source: (Reason, 2016)

Risk assessment is an important aspect to be utilized by an organization as it tends to form an integral section of the health and safety management plan of occupational participants within the organization. Some of its other significant includes;

• Creation of awareness of risk and hazards
• Identification of likely victims to the risk for example workforces, visitors, the public, cleaners, contractors among others related to the organization
• Determination of whether a control program is a necessity for specific hazards
• Determination of whether there are adequate control measures
• Prevention of illness or injuries particularly at the stage of planning or design
• Prioritization of hazards as well as steps of controlling
• Meeting legal and applicable requirements

Organizations often utilize the risk assessment process to evaluate dangers and eliminate them or minimize the risk level by putting necessity control measures. Some of the questions the components need to answer. Include:

• What might incur to the concern organization, and under what circumstances?
• What are the potential consequences of risk
• How much is the possibility of such outcomes to suffer the organization?
• Whether the incurred risks controllable or further actions may be applied?

Relation of risk assessment and the type of fraud

The selected component of internal control has relations with a type of fraud learned during the course. Based on the trail, one of the significant fraud discovered and relates to the selected component includes the misrepresentation of information in a product. The practice was conducted by one organization that deals with wine, where management gave wrong information regarding their wine product to the consumer for the benefits of the organization. Recently, there has been news headlines concerning the criminal and civil proceedings on issues of faulty and misrepresentation of products by the organization’s owners and suppliers.

Also, the type of fraud committed in the incident can be considered to be fraudulent. Rudy swindled wine testers to capture the attention of consumers for the sake of their company’s sales. Substantially, risk assessment could have been used to identify such faults committed by the organization, thereby taking adequate measures to prevent them. The component of risk assessment relates to the company’s fraud because it has been utilize carefully examine the issue that was being alleged. Undoubtedly, the fraud committed by Rudy’s company could have been identified, and practical measures taken to neutralize the misrepresentation of wine products.

Besides, risk assessment relates to the fraud learned during the course since it could have been utilized in the organization to identify the risk of the director’s action. Based on the control component, the organization could have evaluated the danger that could accompany the act of changing the sub-contract firm by employing Rudy’s dad as the proprietor. As such, following the evaluation result, the company’s stakeholders could decline the change to avoid paving a way to the misrepresentation type of fraud. Instead, the control component could provide the company with a legal and ethical way of executing the organization’s benefits.

Building a better culture of an organization

One of the significant responsibilities given to project managers in organizations is to identify risk factors and finding effective measures to manage them. In essence, they spend more time trying to oversee the actions of the concerned team and mitigating the identified threats to the organization. Improving an organization’s culture depends on how the manager utilizes the component of internal control. Moreover, it depends on the risk factors that may impose threats to their organization and how well they will mitigate the identified risk factors. Risk assessment is among the components that the managers can utilize to build a better culture for the organizations.

The use of risk assessment in risk management can build a better organizational culture through the mitigation of systems and procedures. In essence, the organization management can utilize the component to minimize the overhead of imposed risk management on various projects it might undertake (Bromiley, 2015). This can be accomplished by the organization’s management to create a consistent set of standardized templates and tools for risk mitigation. The risk assessment also makes it easier for the organization to optimize its systems and processes in working efficiently within its broader culture. Besides, it allows the organization to have greater consistency in application, especially when training a full group of employees who play an essential role in building organizational culture. Generally, risk assessment helps companies to develop effective systems and procedures, which in turn drive the organization’s activities and operations towards the set or intended culture.

Also, the risk assessment helps organizations’ management to keep records and history of risk factors that might have incurred in their organizations. One of the significant challenges for managers in dealing with risk factors is the identification ad estimation of the risk. Utilizing risk assessment creates or builds an organizational culture of dealing with risk factors. It formulates patterns and trends of knowledge from the experience activities which can be used for adjustment of plans and processes in dealing with present and future risk factors. Based on past information, organizations can build a better organizational culture by planning a way to move forward from the learned experiences.

Furthermore, risk assessment involves protecting and providing the workforce with the proper workplace, including employee training. For a company to continue with its legacy, it is crucial to train its employees on how to align their responsibilities with the existing company culture. During recruitment processes, the firm HR manager can utilze a risk assessment process to ensure the newly recruited employees understand the culture of the organization before commencing their roles.

Understanding the company culture may help to assess future risks to be incurred by the company. Moreover, risk assessment helps to ensure good health and safety measures are provided to the organization workforce. Employees operating in a conducive working environment tend to get motivated, thereby improving their performances in keeping and building a better culture of the company they work within.

Conclusion

In conclusion, risk assessment involves the identification of risk factors that might harm the workforce as well as the workplace they operate within. Moreover, it also requires mitigation of such risk factors, which entails the formulation of effective measures to eliminate or minimize the factors. The use of risk assessment in risk management can build a better organizational culture through the mitigation of systems and procedures. In essence, the organization management can utilize the component to minimize the overhead of imposed risk management on various projects it might undertake. Moreover, the organization management can use the part to reduce the cost of imposed risk management on multiple projects it might take. This can be accomplished by the organization’s management to create a consistent set of standardized templates and tools for risk mitigation. Also, risk assessment helps to ensure good health and safety measures are provided to the organization workforce. In turn, the organization’s workforce tends to retain the organizational culture through getting motivated, thereby improving its performance.